Nigerian equities lose N1.45tr in 10 months

Investors in the Nigerian stock market have lost  N1.45 trillion in accrued capital gains in the past 10 months as share prices at the Nigerian Stock Exchange (NSE) continued to drop. Several quoted companies opened at the weekend at their lowest prices in the past one year while a large segment of stocks have stagnated at nominal value, underlining widespread downtrend at the  market.

Stock Market

Year-to-date analysis indicated that average investors might have lost 15.81 per cent of their investments in the first 10 months of this year, which aggregated to a total market loss of approximately N1.5 trillion. Aggregate market value of quoted companies on the NSE closed October at N10.028 trillion, representing a loss of N1.45 trillion or 12.63 per cent from the year’s opening value of N11.478 trillion.

The benchmark index at the NSE, the All Share Index (ASI) closed  at 29,177.72 points at the weekend as against its opening index of 34,657.15 points for the year, representing a decline of 15.81 per cent. The ASI, a value-based common index that tracks prices of all quoted equities on the NSE, doubles as Nigeria’s sovereign equity index and is used in competitive global evaluation of stock market returns.

With inflation at 9.4 per cent, inflation-adjusted average year-to-date return at the stock market now stands at -25.21 per cent, simply implying that average investors have lost more than a quarter of the real value of their investments.

Several equities across the sectors have closed at their lowest prices in the past one year including Julius Berger Nigeria, Oando, Eterna, Northern Nigerian Flour Mills, MRS Oil and Gas, Scoa Nigeria, Transnational Corporation of Nigeria, Dangote Flour Mills, International Breweries and UACN Property Development Company (UPDC) among others.

Most stocks in the top-league sectors of banking, insurance, healthcare, oil and gas, and food and beverages sectors are trading around their lowest prices over the 52-week period. These included leading stocks such as UAC of Nigeria, Flour Mills of Nigeria, Cadbury Nigeria, Access Bank, FBN Holdings, Union Bank of Nigeria, Diamond Bank, Fidelity Bank, Seplat Petroleum Development Company, May & Baker Nigeria and Skye Bank Plc among others. More than a quarter of quoted stocks, especially in the largely dormant insurance and other non-banking financial services sectors, have stagnated at nominal value, in most cases 50 kobo.

The performance so far is hitting investors who had been at the top-end of the global decline last year. Nigerian equities had ranked among the worst-performing stocks globally last year with average full-year decline of 16.14 per cent.

Aggregate market value of all quoted equities closed 2014 at N11.477 trillion as against its opening value of N13.226 trillion for the year, indicating a loss of N1.75 trillion during the year.

Against the opening value for 2014, the current market value of all quoted equities represents a loss of N3.2 trillion over the 22-month period.

Sectoral analysis showed widespread losses. The NSE Premium Index, which tracks the trio of Dangote Cement, FBN Holdings and Zenith Bank International, indicated a 10-month return of -14.10 per cent. The NSE 30 Index, which tracks the 30 most capitalised stocks on the NSE, recorded average decline of 15.57 per cent. The NSE Pension Index, which tracks 40 stocks specially screened for pension investments, indicated average return of -13.70 per cent. Others returns included NSE Banking Index, -12.15 per cent; NSE Insurance Index, -6.63 per cent; NSE Consumer Goods Index, -17.20 per cent; NSE Oil and Gas Index, -10.54 per cent; NSE Industrial Goods Index, -1.67 per cent while NSE Main Board Index and NSE Lotus Islamic Index recorded -15.09 per cent and -12.64 per cent respectively.

Group head, financial advisory, GTI Capital, Mr. Hassan Kehinde, said the stock market, which had been bogged down by political and policy risks during the political transition period, was affected by post-transition uncertainties and foreign exchange crisis, which led to the exit of influential foreign investors.

Nigerian equities lose N1.45tr in 10 months